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CATERPILLAR REPORTS 1991 FINANCIAL RESULTS

 CATERPILLAR REPORTS 1991 FINANCIAL RESULTS
 PEORIA, Ill., Jan. 22 /PRNewswire/ -- Caterpillar Inc. (NYSE: CAT)


today reported the following results:
 STATISTICAL HIGHLIGHTS
 FULL-YEAR 1991 VS. 1990 (YEARS ENDING DEC. 31)
 (Dollars in millions except per share data)
 Percent
 1991 1990 Change
 Sales and revenues $10,182 $11,436 -11
 Sales inside the U.S. 4,058 5,023 -19
 Sales outside the U.S. 5,780 6,080 - 5
 Revenues of financial subsidiaries 344 333 3
 Profit (loss) (404) 210 -
 Profit (loss) per share of common
 stock (4.00) 2.07 -
 Employment (end of year) 53,636 58,448 -8
 Average number of shares
 outstanding (thousands) 100,910 101,240
 Full-year highlights - 1991 vs. 1990
 LOSS -- The loss resulted primarily from a 12 percent decline in physical sales volume and $373 million of pretax nonrecurring charges, mainly for plant closings and consolidations, and employee redundancy costs.
 SALES AND REVENUES -- Sales and revenues declined 11 percent due to continued significant weakness in most markets Caterpillar serves. Revenues of financial subsidiaries rose 3 percent.
 FOURTH-QUARTER HIGHLIGHTS - 1991 VS. 1990
 The loss for the fourth quarter was $318 million or $3.16 per share. This compares with a profit of $11 million or $.11 per share in the same quarter of 1990. The loss included $324 million of pretax nonrecurring charges. Sales and revenues of $2.46 billion were $299 million lower than the same period a year ago.
 OUTLOOK -- World industry demand in 1992 is expected to increase only slightly from 1991, with improvement in the united states largely offset by weaker conditions in other countries. However, 1992 company sales should benefit from more stable dealer inventory levels, as contrasted to the reduction which took place in 1991.
 Further seriously clouding the outlook is the labor dispute with the United Auto Workers union. Because of the significant uncertainties concerning the economy and the resolution of the labor dispute, it is not practical to forecast 1992 profitability at this time. However, it's expected that the first quarter will be unprofitable.
 In November and December, approximately 9,300 employees were idled in the United States as a result of a labor dispute with the United Auto Workers union. Although this disrupted operations, the effect on 1991 results was not significant.
 The most significant factor affecting 1991 results was a 12 percent decline in physical sales volume, caused by a substantial decrease in market demand. This decline was only marginally offset by a 1 percent improvement in price realization, due to price increases taken in 1991 and the full-year effect of price increases taken in 1990. The price increases were partially offset by a decline in realized prices on product sourced and sold in Brazil when translated to U.S. dollars. Other than Brazil, average currency exchange rates were about the same as in 1990 and had little effect on sales and costs.
 The 12 percent drop in sales volume and the nonrecurring charges accounted for all of the decline in profit. The nonrecurring charges include:
 -- Plant closing and consolidation costs of $262 million,
 principally related to the probable closing of the component
 products division's York, Pennsylvania, facility; the
 consolidation of North American operations of the building
 construction products division; charges for closing the
 Santo Amaro facility in Brazil and consolidating it with
 operations in Piracicaba; and a decline in the estimated
 market value of previously closed facilities.
 -- Charges of $111 million in 1991, primarily for employee
 redundancy costs (other than plant closings) resulting from
 employment reductions in 1991 and planned for 1992 at
 several facilities, and the write-off of surplus assets,
 primarily machinery and equipment. (In 1990, about $15
 million of employee redundancy costs were recorded.)
 A number of other factors also affected profit, but were about offsetting in total. The significant unfavorable items were:
 -- The effects of inflation and lower factory efficiency due
 to substantially lower production volume and temporary plant
 shutdowns
 -- An increase in depreciation and amortization expense of
 $60 million
 -- An unfavorable change in the sales mix as relatively more
 lower margin machines and engines were sold than in 1990
 -- A $36 million increase in interest expense due to a higher
 level of debt
 -- A $34 million increase in research and development costs
 -- An increase in the company's self-insurance reserve related
 to product liability, and
 -- A $21 million decline in currency exchange gains.
 The significant favorable items were:
 -- Improved price realization
 -- Lower costs as a result of reduced employment on all
 payrolls
 -- Lower start-up costs and increased benefits from the
 company's factory modernization program and
 -- LIFO (last-in, first-out) inventory decrement benefits of
 $23 million in 1991, compared with $8 million in 1990.
 In 1991, gross margin (sales less cost of goods sold) as a percent of sales declined compared with 1990. The drop was primarily due to lower physical sales volume. The company is capital intensive with substantial investment in plant and equipment. As a result, a portion of cost of goods sold is fixed in the short-term. Depreciation, for example, does not change with sales volume.
 There were other factors that also affected the gross margin percent. Price realization favorably affected margin, but cost increases (including most of the nonrecurring charges other than plant closing and consolidation costs) and sales mix had unfavorable effects.
 Results from Brazilian operations, which are included in the above factors, deteriorated significantly from 1990 and had a material negative impact on 1991 results. Depressed economic conditions in Brazil throughout the second half of 1990 and all of 1991 resulted in a sharp decline in both physical sales volume and price realization when translated to U.S. dollars. Employment reductions and drastic spending cuts were not sufficient to offset the effect of lower sales. Also, as previously mentioned, fourth-quarter results included a charge related to the consolidation of Brazilian operations.
 FINANCIAL PRODUCTS
 Financial products' pretax profit was $50 million, an $8 million improvement from 1990. Revenues were $344 million, $11 million higher than in 1990.
 The improvement in revenues was due to an increase in Cat Financial's portfolio, which totaled $2.44 billion at year-end 1991, compared with $2.13 billion at the end of 1990.
 The $8 million improvement in pretax profit was principally due to the absence of adjustments to insurance loss reserves made in 1990 for dealer programs and from increased revenues of Cat Financial. These improvements were partially offset by the cost of moving financial products to Nashville, Tennessee. The provision recorded for credit losses was $13 million, about the same as in 1990. Receivables of $13 million were written off against the allowance for credit losses in 1991, compared with $6 million in 1990. At year-end, the allowance was $31 million or $1.4 of finance receivables, compared with $31 million or $1.6 at year-end 1990.
 FOURTH-QUARTER RESULTS
 In the fourth quarter, the company incurred a $318 million or $3.16 per share loss. This compares with a profit of $11 million or $.11 per share in the same quarter of 1990. The loss included $324 million of pretax nonrecurring charges.
 Sales and revenues of $2.46 billion were $299 million lower than the same period a year ago. The consolidated pretax loss in the fourth quarter was 422 million -- a $433 million loss from machinery and engines partially offset by an $11 million profit from financial products.
 A $105 million tax benefit was recorded in the fourth quarter of 1991 as a result of the loss, compared with tax expense of $2 million recorded in the same quarter of 1990.
 MACHINERY AND ENGINES
 The machinery and engines pretax loss was $433 million in the fourth quarter, compared with a profit of $5 million in the fourth quarter of 1990. Sales of $2.37 billion were $278 million lower.
 The drop in sales resulted from a 12 percent reduction in physical sales volume, partially offset by a 1 percent improvement in price realization.
 The deterioration in physical sales volume was primarily due to economic conditions and was not significantly affected by the labor dispute.
 The improvement in price realization resulted from price increases taken since the fourth quarter of 1990, partially offset by the effects of weaker European currencies compared with the U.S. dollar. The weaker European currencies caused both European sales and costs to translate into fewer dollars.
 The principal reasons for the decline in profitability were:
 -- Nonrecurring costs of $324 million, primarily due to plant
 closing and consolidation costs related to the probable
 closing of the York, Pennsylvania; facility the Brazilian
 consolidation; employee redundancy costs (related to
 planned employment reductions at several facilities
 unrelated to plant closings); and charges to reflect the
 lower market value of previously closed facilities
 -- Lower physical sales volume
 -- Unfavorable adjustments to cost of goods sold related to
 inventory in the fourth quarter of 1991, compared with
 favorable adjustments in the fourth quarter of 1990
 -- Increased depreciation
 -- An increase in the company's self-insurance reserve related
 to product liability, and
 -- Higher interest expense.
 The above unfavorable factors were mitigated by the improvement in price realization and a $20 million increase in LIFO inventory decrement benefits.
 FINANCIAL PRODUCTS
 Financial products' pretax profit was $11 million, an $8 million improvement from the fourth quarter of 1990.
 Revenues were $85 million, $21 million lower than in the same period of 1990, principally due to insurance revenues related to extended engine warranty programs. About nine months of premiums were recorded in the fourth quarter of 1990 along with related costs of about an equal amount.
 The $8 million improvement in pretax profit was principally due to the absence of unfavorable adjustments made in the fourth quarter of 1990 to increase insurance loss reserves related to dealer insurance programs.
 1991 SALES
 1991 1990
 (dollars in billions)
 Sales $9.84 $11.10
 Percent change (11)pct. 2 pct.
 Caterpillar's worldwide sales totaled $9.84 billion in 1991, a decrease of $1.27 billion or 11 percent from 1990.
 For the year, total physical sales volume declined 12 percent. The decrease was concentrated in the industrialized world, where recessions and economic slowdowns curtailed construction and investment activity. In developing countries, total physical sales volume rose as reconstruction and development spending in the Persian Gulf more than offset lower demand in many other developing regions.
 SALES BY BUSINESS SEGMENT
 1991 1990
 (billions)
 Machinery $7.40 $8.73
 Engines 2.44 2.37
 $9.84 $11.10
 EUROPE
 Sales declined 13 percent. Sustained high interest rates in recent years pushed over two-thirds of the Western European economies into recessions or substantially slower growth in 1991, causing a reduction in construction spending and new construction orders.
 Year-to-year sales declines were widespread in West Europe. The United Kingdom and the Scandinavian countries were in severe recessions for much of the year. France and Italy weakened considerably, pushing their manufacturing and construction sectors into recession. And in Spain sales fell from previous boom levels as the economy slowed. Only Germany registered significant sales gains as the rebuilding of its eastern region generated strong construction activity.
 Sales into the former Soviet Union rose significantly as a result of major sales to the oil and mining sectors completed prior to the political events of the last five months of the year.
 Sales to East European countries declined to negligible levels as the restructuring of their economies caused severe disruption to economic activity.
 ASIA/PACIFIC
 Sales to the Asia/Pacific region countries declined 12 percent from the peak levels reached in 1990.
 Sales dropped sharply in Australia. Despite policy easing moves, the economy remained in recession for much of the year and the construction sector experienced double-digit declines in activity. In addition, weak profits and consolidation activity depressed equipment demand from the mining sector.
 Sales of U.S.-made Caterpillar products into Japan declined significantly from 1990s record levels. Slowing economic growth, declining business profitability, and a sharp fall-off in housing construction all contributed to a less favorable investment climate.
 In the rest of the Asia/Pacific region, sales began to slow from strong 1990 levels. Restrictive monetary policies and a sizable increase in interest rates in some countries undercut private sector activity. Although overall economic growth continues at a good rate, equipment replacement buying is now beginning to decline from previous buoyant levels.
 AFRICA/MIDDLE EAST
 Sales increased 24 percent, the second consecutive year of double- digit growth. Defense and reconstruction-related spending in the wake of the Gulf crisis substantially boosted sales in Saudi Arabia and Kuwait. In addition, accelerated development spending and improved access to funding generated sizable gains in sales to Iran and Israel.
 These areas of improved sales were only partially offset by declines elsewhere in the region. Sales were lower in South Africa in response to a cyclical downturn in the economy, exacerbated by political uncertainties. Sales in developing Africa slowed as political/economic uncertainties worsened and capital inflows into the region declined.
 LATIN AMERICA
 Sales rose 4 percent, for the eighth consecutive year of growth, as sharply lower sales in Brazil were more than offset by improvement elsewhere in Latin America.
 In Brazil, physical sales volume declined dramatically as the economy remained mired in a severe recession. The Collor government's reform efforts have been largely unsuccessful in stabilizing the economy or controlling inflation, and they have exacted a heavy toll on output and employment. the resulting decline in sales volume has been exacerbated by eroding price realization in U.S. dollar terms as price increases failed to keep pace with devaluations of the Brazilian cruzeiro.
 In contrast, sales rose significantly in the remainder of Latin America. A substantial gain occurred in Mexico, where restructuring of the economy and closer trading ties with the U.S. have sparked an investment boom. There was also sizable improvement evident in sales to Venezuela, benefiting from the restructuring of the economy and funding of large construction projects.
 CANADA
 Sales fell 15 percent, the second consecutive year of double-digit sales declines. Despite policy easing and signs that the Canadian economy was emerging from recession in 1991, low commodity prices and continued declines in construction activity depressed end-user demand in most market applications. In particular, dealer sales into the forest products sector, metal mining, coal mining, and housing construction suffered significant declines from 1990 levels.
 DEALER INVENTORIES OF NEW MACHINES AND ENGINES
 U.S. dealers' new machine inventories dropped sharply in 1991, reflecting sustained dealer efforts to reduce inventories. However, year-end inventories of machines remained above normal relative to current depressed selling rates. U.S. dealer engine inventories by year-end were slightly above 1990 levels and were above normal relative to current depressed selling rates.
 U.S. dealer machine rental fleets declined from year-end 1990 levels, but to a lesser extent than the decline in new machine inventories. Weak economic conditions and continuing business uncertainties encouraged end-users to rent units rather than purchase.
 Outside the United States, dealer new machine inventories at year- end were below year-end 1990 levels. They were also below normal relative to current selling rates. Engine inventories were slightly above year-end 1990 levels and were above normal relative to current selling rates.
 LIQUIDITY AND CAPITAL RESOURCES
 Consolidated cash flows from operations totaled $641 million in 1991, a decrease of $184 million from 1990.
 Total debt was $5.25 billion, an increase of $526 million from year- end 1990, $263 million related to machinery and engines and $263 million related to financial products.
 The percent of total debt to total debt and stockholders' equity excluding financial products was 44 percent at Dec. 31, 1991, compared with 39 percent at Dec. 31, 1990.
 MACHINERY AND ENGINES
 Cash flows from operations totaled $503 million in 1991, a decrease of $197 million from 1990. The cash flow decrease is primarily due to the loss in 1991, versus a profit in 1990.
 Included in the 1991 loss, however, were significant non-cash charges related to plant closing and consolidations, and employee redundancy costs. These items affected profit in 1991, but will not affect cash flows until future years. Partially offsetting the cash flow effect of the loss were a decrease in receivables resulting from lower sales and a decrease in inventories.
 Net cash used for investing activities was $644 million, a decrease of $299 million from 1990. This reduction is primarily the result of a $276 million decrease in capital expenditures, to $650 million.
 In 1991, capital expenditures were reduced as the company's modernization program nears completion. The target completion date is the end of 1993, although the company will do some further modernization throughout the decade. In addition to factory modernization, there were 1991 capital expenditures for new product introductions and the replacement of existing machinery and equipment.
 In 1992, capital expenditures are expected to decrease to about $625 million, due to further reductions in expenditures associated with the modernization program.
 During 1991, machinery and engines debt increased $263 million to $3.14 billion. Long-term debt totaling $882 million was issued, the net proceeds of which were used to finance capital expenditures and to reduce outstanding short-term borrowings.
 In 1991, short-term borrowings were reduced $567 million.
 Machinery and engines had outstanding credit lines totaling $2.04 billion at year-end 1991, including a three-year $500 million revolving credit agreement with a group of commercial banks. Of these credit lines, $576 million was utilized as support for U.S. commercial paper outstanding at year-end and for borrowings from banks, primarily by non- U.S. subsidiaries. The balance was available to support the issuance of additional commercial paper and for other borrowings.
 It is expected the company will place additional medium/long-term debt in 1992 and continue to fund short-term needs through commercial paper.
 Moody's and Duff & Phelps have the company's debt ratings under review for possible downgrade. Should a downgrade occur, Caterpillar does not expect a significant impact on the ability of Caterpillar and its subsidiaries to continue to obtain necessary financing.
 FINANCIAL PRODUCTS
 Cash flows from operations totaled $103 million in 1991, a decrease of $13 million.
 Cash used for investing activities was $407 million, a decrease of $114 million from 1990. This decrease was the result of slower growth in the loan portfolio. Partially offsetting the slower loan portfolio growth, expenditures for equipment leased to others increased $8 million from 1990, to $116 million.
 Financial products debt was $2.11 billion, or 40 percent of consolidated debt, an increase of $263 million to support financing and leasing activity of Cat Financial.
 Financial products had outstanding credit lines totaling $693 million at year-end 1991 including a new three-year $340 million revolving credit agreement that Cat Financial entered into with thirteen banks in 1991. Credit lines of $32 million were utilized for the discounting of bank bills in Australia, the remaining credit lines are considered as support for commercial paper outstanding or are available for borrowings as necessary.
 The credit ratings information covered under machinery and engines also applies to financial products.
 EMPLOYMENT
 At year-end, Caterpillar's worldwide employment, including UAW- represented employees idled as a result of the labor dispute, was
53,636, a decline of 4,812 from the end of 1990. Early in the second quarter of 1991, Caterpillar completed the purchase of the asphalt paving business of


Barber-Greene Company, a subsidiary of Astec Industries, Inc. Excluding the employee additions related to this purchase, worldwide employment declined 5,181 from one year ago. Hourly employment decreased 4,105 while salaried and management decreased 1,076.
 YEAR-END EMPLOYMENT 1991 1990
 United States 38,669 40,895
 Outside U.S.
 Europe 8,690 9,572
 Latin America 4,845 6,224
 Asia/Pacific 1,196 1,175
 Canada 148 489
 Other 88 93
 14,967 17,553
 Total Employment 53,636 58,448
 Because of the need to bring production in line with demand, actions were taken throughout the year to reduce production and employment through a combination of attrition, a hiring freeze for salaried and management employees, indefinite layoffs, early retirement plans, and temporary partial plant shutdowns. Late in the year, specific actions were announced which will lead to further employment reductions g of its York, Pennsylvania, manufacturing facility. Further employment adjustments may be necessary in 1992 depending upon the length of the UAW strike and the timing of an economic recovery.
 1992 OUTLOOK
 The economic outlook for 1992 is for continued weak performance in the first half of the year with improving conditions in the second half, particularly in the United States and Canada.
 Recent Federal Reserve actions to reduce interest rates further and inject even more liquidity should help the U.S. economy in 1992. In addition, the U.S. government is likely to provide some form of temporary income tax cuts and investment incentives to pull the economy out of its two-year doldrums. These actions will likely produce a sustainable recovery for the United States in the last half of the year. The industries Caterpillar serves are expected to respond to the improved economic conditions.
 Sales in the United States and Canada will benefit from a revival in housing starts, highway construction, and on-highway truck investment. Expected improvement in construction material producing sectors will also benefit sales.
 In Western European countries, high interest rates and tight liquidity have produced recessions and near-recessionary conditions. As a result, industry demand is likely to decline through most of the year. These policies are expected to be reversed during the year as recessionary concerns increase.
 In Eastern Europe and the former Soviet Union, severe economic disruptions generated by reforms are likely to continue to sharply limit sales in 1992.
 Demand in developing countries has already softened due to the slowdown within the industrialized countries and declining commodity prices. However, demand should not fall off as fast as in the last downward cycle principally because of the debt restructuring that has taken place.
 Among developing countries, Mexico will continue to be one of the bright spots in terms of growth and sales potential. The outlook for the Brazilian economy is still highly uncertain as recent policy reforms have largely failed to correct fundamental problems. Nevertheless, it is anticipated the company's Brazilian operations will show improvement from the materially unprofitable results in 1991.
 World industry demand in 1992 is expected to increase only slightly from 1991, with improvement in the United States largely offset by weaker conditions in other countries. However, 1992 company sales should benefit from more stable dealer inventory levels, as contrasted to the reduction which took place in 1991.
 Further seriously clouding the outlook is the labor dispute with the United Auto Workers union. Because of the significant uncertainties concerning the economy and the resolution of the labor dispute, it is not practical to forecast 1992 profitability at this time. However, it's expected the first quarter will be unprofitable.
 Worldwide sales of machinery declined 15 percent from 1990. A significant decrease in market demand in the industrialized countries was primarily responsible for the lower sales. In addition, a substantial reduction in dealer new machine inventories contributed to the severity of the decline.
 Sales of engines increased from 1990 levels. Diesel engine sales declined, due to substantial weakness in direct sales to truck manufacturers. This was more than offset by the fourth consecutive year of increase in turbine engine sales, which reached a record level in 1991, as demand from the oil and natural gas industries remained strong.
 CAT INC.
 SALES INSIDE/OUTSIDE U.S.
 (Billions of dollars)
 1986 1987 1988 1989 1990 1991
 Outside $3.34 $3.89 $5.18 $5.75 $6.08 $5.78
 Inside $3.98 $4.29 $5.07 $5.13 $5.02 $4.06
 CATERPILLAR SALES INSIDE THE UNITED STATES
 1991 1990
 (billions)
 Machinery $3.01 $3.97
 Engines 1.05 1.05
 $4.06 $5.02
 Caterpillar sales inside the United States were $4.06 billion, a $965 million or 19 percent decline from 1990, resulting almost entirely from lower physical sales volume. The decrease reflected substantial declines in market demand, coupled with a significant reduction in dealer machine inventories during the year.
 Despite belated moves by the U.S. Federal Reserve to ease monetary policy and reduce interest rates, the U.S. economy remained depressed in 1991. Statistics suggest that a very weak recovery began in the last half of the year, but for all practical purposes the economy remained in recession throughout 1991.
 The markets that Caterpillar serves were particularly hard hit by the generally weak economy. Recessionary conditions prevailed in almost all industry segments throughout the year, with business profitability and market activity evidencing significant declines from 1990 levels.
 As a result, end-user demand for machines fell for the third consecutive year, with significant declines in almost all applications.
 Construction-related sectors fared worse than commodity applications, as weak markets and overbuilt conditions in some sectors sharply depressed new project start-ups and end-user demand:
 -- Dealer sales to housing contractors plummeted, the third
 year in a row of significant decline. Although housing
 starts began to register a slow recovery during the course
 of the year, activity for the year was at the lowest level
 since 1945.
 -- Dealer sales into the commercial and industrial building
 construction sector declined at double-digit rates in 1991.
 Deteriorating business profitability, high vacancy rates,
 and declining production levels resulted in construction
 spending cutbacks for both factories and commercial buildings.
 -- Dealer sales to highway contractors also declined as actual
 construction work on roads, streets and highways fell from
 1990 levels. Activity levels were hurt by delays in
 spending new federal highway funds as well as budget
 constraints at the state and local government levels.
 -- Dealer sales into other construction sectors --- primarily
 utilities, dams, and harbors --- declined significantly as
 these sectors also were affected by slowing spending
 trends, budgetary limitations, and the unfavorable investment
 climate.
 Dealer machine sales into commodity-related sectors were down substantially from 1990 levels as low commodity prices, production declines, and deteriorating profitability all served to depress equipment replacement buying:
 -- Dealer sales into the coal sector declined significantly as
 coal mines cut back equipment purchases in response to
 lower production levels and marginally lower prices.
 -- Dealer sales into sand and gravel mining, lumber and forest
 products, and industrial applications (primarily manufacture
 of building materials) all declined significantly from 1990
 levels as reduced construction spending caused cutbacks in
 operating rates in these sectors.
 -- Lower production levels and weak commodity prices curtailed
 equipment demand from metal mining operations.
 -- Solid waste disposal applications also experienced decreases
 in equipment demand, reflecting the generally weak economic
 conditions.
 -- Dealer sales into the agriculture sector were lower in
 response to a decline in farm income levels.
 -- The only machinery application recording an increase in
 end-user demand in 1991 was the petroleum sector, where
 stepped-up equipment investment activity early in the year
 lifted dealer sales for the year.
 Total engine sales inside the United States remained near 1990 levels. Diesel engine sales fell significantly due to a major decline in direct sales of truck engines as truck manufacturers slashed production. This decline was only partially offset by increases in dealer sales of industrial engines into selected applications, particularly for electric power generation. Sales of turbine engines increased substantially in response to sustained strong replacement investment activities for natural gas transmission equipment.
 Direct sales of machines, engines, and replacement parts to the U.S. Department of Defense declined 18 percent to $51 million in 1991.
 CATERPILLAR SALES OUTSIDE THE UNITED STATES
 1991 1990
 (billions)
 Machinery $4.39 $4.76
 Engines 1.39 1.32
 $5.78 $6.08
 Caterpillar sales outside the United States totaled $5.78 billion, a $300 million or 5 percent decline from 1990. These sales represented $59 of the worldwide total, which is a record percentage of total sales.
 The sales decline outside the United States resulted from significant decreases in market demand, which more than offset a modest improvement in price realization.
 Machinery sales were heavily affected by weakening business conditions in the industrialized countries. Two years of high interest rates in these countries produced slowing economic growth and cutbacks in construction spending. The consequent decline in end-user demand in the industrialized world more than offset selected areas of demand growth in developing countries generated by reconstruction and development projects.
 In contrast, engine sales outside the United States increased significantly. Diesel engine sales rose primarily due to improved price realization. Increased dealer sales volume of industrial engines to various applications -- notably for electric power generation, petroleum, and construction and mining -- was offset by lower demand from truck manufacturers in Canada, Australia, and the United Kingdom. Turbine engine sales increased significantly as a result of expansions in gas production and pipeline capacity in countries such as Canada, and increased oil production capability in countries such as Venezuela.
 CATERPILLAR INC.
 CONSOLIDATED RESULTS OF OPERATIONS
 (Dollars in millions except per share data)
 Three Months Ended Year Ended
 Dec. 31, Dec. 31, Dec. 31, Dec. 31,
 1991 1990 1991 1990
 Machinery and engines:
 Sales $2,373 $2,651 $9,838 $11,103
 Operating costs:
 Cost of goods sold 2,077 2,211 8,451 9,218
 Selling, general, and
 administrative
 expenses 363 337 1,245 1,290
 Research and development
 expenses 78 63 272 238
 Provision for plant
 closing and consolidation
 Costs 241 -- 262 --
 2,759 2,611 10,230 10,746
 Operating profit (loss) (386) 40 (392) 357
 Interest expense 74 60 294 258
 (460) (20) (686) 99
 Other income 27 25 65 120
 Profit (loss) before
 taxes (433) 5 (621) 219
 Fiand
 administrative
 expenses 32 65 132 148
 Interest expense 45 40 175 148
 77 105 307 296
 Operating profit 8 1 37 37
 Other income 3 2 13 5
 Profit before taxes 11 3 50 42
 Consolidated profit (loss)
 before taxes (422) 8 (571) 261
 Provision (credit) for income
 taxes (105) 2 (152) 78
 Profit (loss) of consolidated
 companies (317) 6 (419) 183
 Equity in profit (loss) of
 affiliated companies (1) 5 15 27
 Profit (loss) $(318) $ 11 $ (404) $ 210
 Profit (loss) per share
 of common stock $(3.16) $ 0.11 $(4.00) $2.07
 Weighted average number
 of common shares
 outstanding (thousands) 100,911 100,905 100,910 101,240
 -0- 1/22/92
 /NOTE TO EDITORS: The financial position statements are in landscape format and cannot be transmitted via E-Mail. If you want this financial statements faxed to you, call:
 Richard E. Stober
 Caterpillar Inc.
 Public Information
 (309) 675-5548
 To assist you in reporting Caterpillar's financial results, below is a brief definition of selected financial terms used in Caterpillar financial releases:
 CONSOLIDATED. This represents the consolidated data of Caterpillar and all its subsidiaries and affiliated companies.
 MACHINERY AND ENGINES. This represents all company operations excluding financial products subsidiaries. Machinery and engines consists primarily of the company's manufacturing, marketing, and parts distribution operations for earthmoving and materials handling equipment, and engines. These operations are highly integrated. Except when attributed to a particular subsidiary, items discussed in this news release reflect the consolidated effect of contributions by all of the company's worldwide operations.
 FINANCIAL PRODUCTS. This consists of Caterpillar's financial products subsidiaries, primarily Caterpillar Financial Services Corporation and Caterpillar Insurance Co., Ltd. Caterpillar Financial Services Corporation and its subsidiaries in Canada, Australia, and Germany derive earnings from financing sales and leases of Caterpillar products and from loans extended to Caterpillar dealers and customers. Cat Insurance provides insurance services primarily to Caterpillar's U.S. dealers.
 SALES AND REVENUES. This represents sales of products (machines, engines, turbines, lift trucks, and parts), plus revenues from Caterpillar's financial subsidiaries.
 PHYSICAL SALES VOLUME. This is a measurement of product sales in constant dollars (i.e. with all price changes removed). Physical sales volume reflects whether more or less product is actually being sold. Physical sales volume answers the question: Are dealers and OEMs (original equipment manufacturers) buying more or less than a year ago?
 PRICE REALIZATION. This reflects the net effect of all price changes and discounting. It includes all price changes costs of special incentive and marketing programs warranty costs and the translation effects of sales made in currencies other than the U. S. dollar.
 PROFIT PER SHARE. Total profit divided by the weighted average number of common shares outstanding.
 AFFILIATED COMPANY. An affiliated company is one in which ownership is 50 percent or less. Shin Caterpillar Mitsubishi Ltd. (SCM) in Japan is Caterpillar's principal affiliated company. (Established in 1963, SCM is a 50/50 joint venture between Caterpillar Inc. and Mitsubishi Heavy Industries Ltd. of Japan.) Accordingly, Caterpillar's share of the profit or loss of an affiliated company is included in one line in consolidated results of operations as "equity in profit of affiliated" companies.
 SUBSIDIARY COMPANY. A subsidiary company is one in which Caterpillar Inc.'s ownership is more than 50. Financial results of these subsidiary companies are consolidated -- line by line -- into Caterpillar's financial statements. Almost all of Caterpillar subsidiary companies are 100 percent owned and are therefore designated "wholly owned." For example, Solar Turbines Incorporated is a wholly owned subsidiary company of Caterpillar Inc. as is Caterpillar Financial Services Corporation, Caterpillar's largest financial subsidiary./
 /CONTACT: Richard E. Stober of Caterpillar, 309-675-5548/
 (CAT) CO: Caterpillar Inc. ST: Illinois IN: MAC SU: ERN


PS -- NY107 -- 2573 01/22/92 23:21 EST
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CATERPILLAR INC. THIRD QUARTER 1992 FINANCIAL RESULTS
CATERPILLAR FINANCIAL SERVICES CORP. ANNOUNCES RECORD RESULTS FOR 1992
Caterpillar's Third-Quarter Profit Per Share Up 27%
Cat buys forestry equipment dealer.
Hideaki Ninomiya Named Mitsubishi Caterpillar Forklift America Inc. President.

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